Palace supports BIR tax hike on private schools

Published June 10, 2021, 6:38 PM

by Genalyn Kabiling

It seems that Malacañang is unlikely to reverse a Bureau of Internal Revenue (BIR) rule imposing higher corporate income tax on private schools in the country for now.

President Rodrigo Duterte (File photo/Malacañang)

Presidential Spokesman Harry Roque declared Thursday that the Palace supports the Department of Finance’s position on the tax regulation that slaps 25 percent corporate income tax on private schools.

“Nagsalita na po ang ating kalihim ng Department of Finance (The Secretary of Department of Finance has spoken) and we of course support the position of the Secretary of Finance,” he said during a televised press briefing Thursday, June 10.

“”Yung interpretasyon po ng BIR doon sa non-profit schools na dapat 100% na kinikita nila ay hindi napupunta sa (The BIR’s interpretation on non-profit schools is that 100 percent of income should not go to) any other purpose other than for the purpose of the school is pursuant to the CREATE law and pursuant to the established jurisprudence,” he said.

Finance Secretary Carlos Dominguez III earlier said there was no urgency to change the tax regulation at the moment, since final returns for 2021 are due next year. He also explained that the BIR merely followed the Tax Code when they crafted the new ruling.

READ: Private schools’ tax concern not urgent—DOF

The Coordinating Council for Private Educational Associations (COCOPEA) recently appealed to the President to reverse the BIR ruling on the higher tax rate on private schools. The group expressed concern that BIR’s regulation will cause “irreparable damage” to schools since the bureau will raise the tax rate to 25 percent from 10 percent.

READ: Private schools ask Duterte to reverse BIR rule

“The erroneous provision of RR 5-2021 will add a heavy additional burden to the many stakeholders of the private education sector, at a time when we are already fighting for our survival,” the group said.

“Our sector has not yet recovered from the debilitating effects of the K-12 Law, and is in the midst of struggling with the steep drop in enrollment caused by the pandemic. RR 5-2021 will be the straw that breaks the camel’s back,” it added.

Some senators have appealed to the BIR to recall the alleged erroneous revenue order amid concerns this tax rate might bankrupt struggling schools.

Senate President Pro Tempore Ralph Recto said Republic Act No. 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act aims “to bail out distressed private schools.” “The BIR order further drowns them in a sea of red ink,” he said.

READ: Revoke ‘erroneous’ IRR raising tax rate on private schools, BIR told